The $20.6 million sale of a two-building office complex in Arlington, Va. this week provides fresh evidence that commercial real estate deals are reviving. In fact, buyers are lining up to purchase well-located properties filled with tenants.

More than 60 potential buyers traipsed through Virginia Square Plaza, which includes a 40,769 sq. ft. medical office building and a smaller general office structure of 29,246 sq. ft. Nearly half the investors who viewed the property wanted it badly enough to make a commitment. In all, 29 written offers were submitted, according to Jim Kornick, senior managing director at Minneapolis-based NorthMarq Investment Services, a commercial real estate services firm that represented the seller.

The successful buyer was ProMed Properties, a medical office investor owned by Gazit-Globe Ltd., a global real estate company based in Israel. ProMed owns more than 1 million sq. ft. of medical office and medical research buildings.

“So far this year, it’s the largest transaction we have done as an investment sales team,” says Matt Clinebell, vice president of investment services at NorthMarq. “It’s a positive sign because investors will slowly start to begin chasing core product in other markets as well.”

NorthMarq has 32 offices across the country, and Clinebell says he has received reports that interest in transactions recently has increased. “I talked to a couple of investors who are actively pursuing deals in other parts of the country. Things are picking up.”

Major investors are beginning to come off the sidelines and ramp up their spending plans, according to Bethesda, Md.-based commercial real estate information firm CoStar Group. The Employees Retirement System of Texas plans to increase its commercial real estate portfolio to as much as $1.7 billion from $460 million, CoStar reports.

Taking Manhattan

Toronto-based CCP Investment Board, an investment management group, has agreed to invest $576 million for a 45% interest in a Manhattan office property, and has committed to additional New York deals, according to CoStar.

The pace of deal making is accelerating in the highly competitive Washington, D.C.-market. “We’re working on several deals that are larger than this,” says Clinebell, referring to the Arlington medical office transaction.

In the Virginia deal, ProMed’s offer was especially attractive to the seller because the buyer agreed to assume a commercial mortgage-backed securities (CMBS) loan on the larger building. That saved the seller hundreds of thousands of dollars, says Clinebell. “They’re an all-cash buyer, but they offered to assume the loan.”

The offer differentiated ProMed from two other investor finalists competing for the office complex. “It came down to a high-net-worth private individual, a pension fund adviser, and ProMed, which won the deal,” says Clinebell.

More deals?

In addition to the two buildings with about 70,000 sq. ft. of rentable space, the Arlington complex includes the opportunity to develop another 43,000 sq. ft. at the site. The property lies two blocks from George Mason University’s Arlington campus, and a mile from the Virginia Hospital Center.

“We plan to further develop this campus by adding an additional medical office building/outpatient center anchored by a hospital system or medical university,” said Josh Friedman, ProMed CEO, in a statement.

The transaction was completed in less than two months, far more quickly than the brokers had anticipated. “It was a surprise because we had heard horror stories about other conduit loan assumptions taking over six months,” to close, says Clinebell.

Going forward, NorthMarq is working with pension fund advisers, real estate investment trusts and other international investors on potential new transactions.